The British insurance organization Pool Re is going to issue the first-ever bonds, the purpose of which is to protect against terrorist acts.
Baltic PCC Ltd will be in charge of placing bonds. It is about the three-year bonds in the amount of 75 million British pounds with the yield of 5.9%.
A new type of securities will allow investors to protect their investments from the risks associated with the terrorist threat. It will be possible to receive payments if the cumulative impact of terrorist attacks in Britain is more than 750 million pounds per year.
Julian Enoizi, Pool Re’s CEO, says that work on the placement of bonds has been carried out for several years. He also notes that now the company is the first to offer the market the latest source of capital in the sphere of protection against terrorism. He believes that other insurance programs of such risks that exist at the moment will be able to learn from the experience of these securities and use it in their work.
In 1992 Britain suffered from the attack that caused damage in the amount of 650 million pounds. We recall that there was an explosion near the Baltic Exchange in London. The next year the state initiated the foundation of Pool Re. The task of the organization was to protect companies from the terrorist threat. Over time, the company has grown that means getting more responsibilities and significant expansion of its interests.
Cat bonds appeared in 1990s. They were intended to protect insurers. Mostly, they were used to protect against natural disasters. Now, they are used in different areas, for example, to protect against hacker attacks.
Currently, the bond market of this kind is growing rapidly. As early as 2009 they accounted for only $ 18 billion. Last year that figure totaled $ 93 billion.
Earlier, similar securities for Britain were issued in Bermuda. Since last year, they were allowed to be placed in the capital of the United Kingdom.
Pool Re experts emphasize that an important feature of this market is that it is almost impossible to predict the likely threat. New tools make it possible assess risks and conduct more secure investment activities.
The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade